KUALA LUMPUR (April 26): Mercury Securities Sdn Bhd has valued ACE Market-bound Sin-Kung Logistics Bhd at 14 sen based on a 14 times financial year 2025 (FY2025) earnings per share forecast of one sen.
The research house, which does not have a rating on the stock, said it believes the company deserves a premium valuation above its local peers, at nine to 11 times price-earnings (PE), given its niche in the logistics business (specialising in airport-to-airport road feeder services) and superior margins.
In an initial public offering note on Friday, the research house said a stronger rebound in air cargo traffic and/or recovery in the electrical and electronics (E&E) sector will be key catalysts driving the stock's performance in the near term, before new warehousing capacity comes on stream by 2026.
Mercury said revenue for Sin-Kung’s warehousing business segment has jumped from RM2.8 million in FY2020 (6% of sales), to RM8.2 million in FY2023 (16% of sales), supported by new warehouse acquisitions over the years.
It said upon completion of the new Valdor Warehouse construction in 2026, the addition of 192,000 pallets will double Sin-Kung's existing annual capacity.
“This new warehouse is strategically located in Seberang Perai and will primarily serve customers in the northern region of Peninsular Malaysia (likely from the E&E sector).
“Anchored by the air cargo traffic rebound and increasing contribution from the warehouse business, we expect Sin-Kung to achieve a higher net profit of RM10-14 million over FY2024-2026F.
“We opine that Sin-Kung could achieve higher growth beyond FY2026 once its new Valdor Warehouse is completed,” it said.